REQUEST FOR PROPOSALFOR

REAL ESTATE INVESTMENT MANAGEMENT SERVICES

THE ALABAMA TRUST FUNDSTATE OF ALABAMA

Release Date: June 7, 2010Proposal Due Date: July 2, 2010

1. Overview. This Request for Proposal (RFP) has been issued by the Alabama Trust Fund Board of Trustees (Board). The Board solicits proposals from qualified professional firms interested in providing core and/or value added real estate investment management services (the Manager) to the Alabama Trust Fund.

Candidate firms should have expertise in managing diversified core and/or value added real estate portfolios. The goal is to identify managers with a proven record of performance who manage core and/or value-added real estate commingled funds. This Request for Proposals (hereinafter “RFP”) is issued in accordance with the requirements of Section 41-16-72(4), Code of Alabama (1975). This RFP is not an offer to contract but seeks the submission of proposals from qualified, professional firms that may form the basis for negotiation of an Investment Management Agreement with one or more Investment Managers. The Board reserves the right to reject any or all proposals and to solicit additional proposals if that is determined to be in the best interest of the Alabama Trust Fund.

The Alabama Trust Fund’s Investment Consultant, Callan Associates, will be receiving and analyzing all responses from this manager search. All candidate firms must also have their information in the Callan manager database. There is no charge associated with this process. Please contact Jay Nayak at 415-974-5060 to receive information about this process.

It is the intent of the Board to do business with Alabama firms that pay Alabama taxes and employ Alabama citizens. When all factors are equal, corporations located in Alabama will be given preference.

The Treasurer shall post the RFP on the treasury website www.treasury.alabama.gov

2. History of the Alabama Trust Fund.The Alabama Trust Fund (“ATF”) was created by Amendment 450 to the Alabama Constitution and ratified in 1985. The ATF was established as in investment vehicle for the management of oil and gas capital payments generated from drilling activity in Alabama’s offshore waters. The Alabama Trust Fund is under the management and control of a nine member board. The board consists of the Governor, Finance Director, State Treasurer and six appointed members.

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The investment objectives of the Trust Fund are to (1) consistently generate more than $100 million in annual income and distributable gains; (2) preserve the real value of its cash flow; and (3) to provide a means through undistributed capital gains to increase the corpus of the trust in anticipation of declining oil and royalty payments.

The Alabama Trust Fund has assets, as of March 31, 2010, of approximately $2.5 billion. The current allocation is 68% to Fixed Income and 32% to Equity. Callan Associates assists the ATF Board with asset allocation, investment policy and manager selection and monitoring.

Information about the ATF, including the current Investment Policy and Manager Guidelines, is available at the Treasurer’s website which is www.treasury.alabama.gov.

3. Minimum Qualifications. In order to be considered for selection, Exhibit C should be included in the proposal as docu-mented proof that the following minimum qualifications listed below are met. The Respondent has a continuing obligation to disclose information throughout the RFP process should any quali-fications or situations change that might render the Respondent as an unqualified candidate.

Company is duly registered with the Securities & Exchange Commission pursuant to the Investment Advisors Act of 1940, as amended, and the registration is current.

Company selected shall qualify with the Secretary of State to conduct business in the State of Alabama and must keep current. (To download the form for a “Certificate of Existence”, access www.sos.state.al.us, corporations division, or call 334-242-5324 to request the form.)

The portfolio manager assigned to the account has managed real estate portfolios for at least five (5) years, as of March 31, 2010

Company has managed real estate portfolios for at least five (5) years, as of March 31, 2010.

Company does manage at least $1,000,000,000 in real estate portfolios as of March 31, 2010.

Company and its personnel have all authorizations, permits, licenses, and certifications as may be required under federal, state or local law to perform the services specified in this RFP at the time it submits a response to the RFP.

Company will carry errors and omissions insurance or comparable instrument to cover negligent acts or omissions.

Company does comply with all applicable Global Investment Performance Standards (GIPS).

Company maintains sufficient procedures and capabilities to ensure the timely and accurate backup and full recovery for all computers and other data storage systems related to the ATF account.

Company has a company policy and practice of equal employment opportunity and non-discrimination based on race, creed or gender.

Company attests that all workers providing the services described in this RFP are either citizens of the United States or are in proper and legal immigration status that authorizes them to be employed for pay within the United States.

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4. Scope of Services (a) The Manager shall invest the assets in a diversified core or value-added real estate

commingled fund. It is expected that the initial funding will be approximately $125 million allocated to two different managers. The Board shall establish the portion of assets to be managed and may, from time-to-time, change such portions.

(b) The Manager shall have independent discretionary authority with respect to the investment of that portion of the assets managed by the Manager, subject to the Code of Alabama, Investment Guidelines and such other written limitations as the Board may impose upon the Manager. A copy of the Investment Guidelines is available at www.treasury.alabama.gov . If the respondent opposes any language in the guidelines, this should be addressed in the proposal.

(c) The Manager shall provide reporting, to include monthly valuation, monthly performance reports, and significant changes in corporate structure, and other data to the Consultant.

(d) The Manager shall document all investment transactions with the Custodian in accord with usual and customary standards of practice, and confirm all executed transactions for custodial account records. The current custodian is the BNY Mellon.

5. FeesManagers shall be entitled to receive quarterly compensation. Fees shall be payable based upon the fair market value on the last business day of each quarter as reported by the ATF Custodian. The proposal must state the fees charged for this service assuming a $62.5 million mandate. Please show breakpoints in fee schedule in Exhibit B.

Any charge for services not addressed in the Statement of Fees in your proposal will not be allowed during the course of the contract. Fees will not increase during the term of the contract.

6. Proposal Required Information. Proposals should be as thorough and detailed as possible so that your capabilities to provide the required services can be properly evaluated.

To be considered, responses to this RFP must include: (1) Exhibit A, Proposal, (2) Exhibit B, Statement of Fees; (3) Exhibit C, Minimum Qualifications; and (4) Disclosure Statement. All proposals submitted in response to this RFP must include one original and completed Disclosure Statement as required by Section 41-16-80, et seq., Code of Alabama (1975). Copies of the Disclosure Statement, and information, may be downloaded from the Alabama Attorney General’s web site at www.ago.state.al.us/ag_items.cfm.

7. Submission of Proposals.Proposals must be received at the following address no later than the close of business on July 2, 2010. Provide the original plus two(2) copies.

Attention: Annoesjka West Callan Associates 200 Park Avenue

Suite 230

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Florham Park, NJ 07932

All questions concerning this RFP should be directed to Annoesjka West at Callan Associates byphone 973-593-8050 or email west@callan.com.

Submission Deadline. It is the responsibility of the Respondent to ensure that its proposal is timely delivered and received by Callan on or before 5:00 p.m. on July 2, 2010. Callan will not consider proposals received after the date and time specified herein. Callan assumes no responsibility for late delivery by the U.S. Mail, a commercial courier service, or any other method of delivery selected by the Respondent.

Questions and Inquiries. The sole point of contact for purposes of this RFP is Annoesjka West. Any questions or inquiries should be directed to her. Any oral communications shall be considered unofficial and nonbinding on the State.

Rejection of all Proposals. The Board reserves the right to reject any or all proposals and/or to solicit additional proposals if that is determined to be fiscally advantageous to the State or otherwise in its best interests.

8. Efforts to Influence Selection Process Prohibited The integrity of the Request for Proposals process is of primary importance and will not be compromised. Any written or oral communications beyond the RFP Response made by responders, or others on their behalf, whether paid or unpaid, to influence the selection process, from the time the RFP is issued through its conclusion, made directly or indirectly to the ATF Board members, Finance staff, or Treasury staff will be grounds for immediate elimination from the selection process. Annoesjka West is the sole point of contact.

9. Evaluation and Selection. All proposals timely received will be reviewed and evaluated by the Investment Consultant. The Consultant will recommend proposals to the Investment Committee or Board that most closely meet the requirements of the RFP.

After the review and evaluation of the proposals, the Board may conduct interviews. Finalists chosen for interviews, if necessary, will be notified. The Board reserves the right to request a best and final offer for fees from finalists.

The Board will select the Manager(s) the Board determines, in their sole discretion, to be fully qualified and best suited among those submitting proposals on the basis of the evaluation factors, including fees, to best meet the needs of the Alabama Trust Fund. All proposals received in response to this RFP may be rejected and the Board may solicit additional proposals.

Upon identification of the selected Manager, if any, the Board may initiate negotiations for contract terms and conditions. The contract will incorporate reference to the requirements of the RFP and the Manager’s proposal as negotiated.

10. Agreement.

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All duties of the Manager shall be set forth in a contract agreement between the Manager and the Board. It is expected the term of the contract will be for a five year period. The contract will incorporate reference to the requirements of the RFP and the Manager’s proposal as negotiated.

State law prohibits the Board from agreeing to (1) indemnify the Manager; (2) waive the right for jury trial; (3) grant a security interest; or (4) binding arbitration. Additionally, it is mandatory that Alabama laws apply to the performance of the contract and that jurisdiction and venue be in Montgomery, Alabama for state and federal courts.

11. Public InformationAll responses received will be subject to the Alabama Open Records Act, §36-12-40, Code of Alabama and may be subject to public disclosure upon request. The Open Records Act is remedial and should therefore be liberally construed in favor of the public. The Alabama Trade Secrets Act is §8-27-1 through §8-27-6, Code of Alabama. Responders are cautioned to be familiar with these statutes. The burden is on the one asserting the trade secret to show that the information sought to be protected meets the definition of a Trade Secret as defined in the Act.

Any RFP response submitted that contains confidential, trade secrets or proprietary commercial information must be conspicuously marked on the outside as containing confidential information, and each page upon which confidential information appears must be conspicuously marked as such. Identification of the entire Proposal as confidential is not acceptable unless the Firm enumerates the specific grounds or applicable laws which support treatment of the entire material as protected from disclosure according to the foregoing statutes or other applicable Alabama law.

The owner of the confidential information shall indemnify and hold the State of Alabama, the State Treasurer, and Treasury staff harmless from all costs or expenses, including but not limited to attorney fees and expenses related to litigation concerning disclosure of said information and documents.

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Exhibit AProposal

2.1 CORPORATE INFORMATION

A. Corporate Information - Provide an overview of your firm, including the following:Corporate profile, including the financial condition of the firm, overall business objectives, strategic plans for growth, and ownership. Are there any changes pending in this profile?;1. Information on all “related” or “affiliated” firms;2. If your firm is an affiliate/subsidiary of a larger organization or a joint venture partner with

another organization, describe the method of communication and quality control between the two organizations. Define the specific responsibilities of each of the parties.

3. List all office locations and the functions performed at each location; 4. List all investment management services offered by the firm (i.e. Domestic Equity, Foreign

Equity, Domestic Fixed Income, etc). When did the firm begin managing real estate commingled funds? Does the firm provide any other product or service other than portfolio management? Please list.

5. Provide details of any past or pending litigation relating to your firm, individual personnel, or to the management of client assets.

6. Provide details of any SEC, state regulatory, self-regulatory organization, or professional organization action taken against your firm or any of its owners, principals, or personnel.

7. Provide details of all SEC fidelity bonds, errors and omissions coverage, and any other fiduciary insurance, which your firm carries.

8. Describe all arrangements or understandings (written or oral) between your firm and any advisor, broker, law firm, or other individual or entity in connection with the solicitation or referral of clients between the firms.

9. Describe any conflicts of interest your firm may have in the management of this account.10. Has your firm adopted policies consistent with GIPS trade management/soft dollar

guidelines? If so, provide details.11. Provide details of any claims, disputes, litigation or other legal proceedings where your firm

is involved with the State of Alabama or any of its agencies, or has been involved, in the three preceding years.

B. Personnel1. Attach an organizational chart and biographies of key personnel assigned to this account,

including length of experience and expected retention. Key personnel includes investment officers, portfolio managers, and analysts.

2. Complete the following chart:FirmTotal

Breakdown by office location

Total Full-time Employees

Portfolio ManagersResearch AnalystsAcquisitionsDispositionsAsset Management

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Property ManagementLeasingLegalAccounting/FinancialClient Servicing/MarketingIT (Technology)Senior ManagementOther __________________TOTAL

3. Provide the number of key employees added/lost over the last 3 years and explain any departures.

#Added #Lost # Real Estate Employees(added/lost)

2009 /2008 /2007 /

C. Clients

1. Please provide the organization name, address, contact name and phone number of at least three U. S. tax-exempt clients.

2. Please provide 3 U.S. tax exempt plan sponsors that terminated your firm’s real estate investment management services.

2.2 INVESTMENT OPERATIONS/ASSETS MANAGEMENT.

1. Investment management services offered as of 3/31/10. The total should represent all strategies and include all assets under management: (Complete all that apply)

Discretionary Separate Accounts

Non-Discretionary Separate Accounts Commingled Funds Total

# of accts.

Market Value ($mm)

# of accts.

Market Value ($mm) # of accts.

Market Value ($mm) # of accts.

Market Value ($mm)

Gross Net Gross Net Gross Net Gross Net200920082007 20062005

Please include the following information for the firm’s commingled funds currently under management.

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Name of Fund $ Gross

Size Open or Closed-end Investment Strategy Date FormedLegalLife

2. Please indicate the number of Open-end vs. Close-end Commingled funds your firm has under management as of 3/31/10.

Number Gross Market Value ($mm)Open-end Commingled FundsClose-end Commingled FundsTotals

3. Provide a breakdown of all (Commingled and Separately – Managed) Tax Exempt Accounts under management as of 3/31/10.

Total FirmNumber Gross Market Value ($mm)

Employee-Benefit Funds Corporate Multi-Employer PublicEndowments & FoundationsOther:Total Accounts

4.Provide a list of investors that have allocated money to the fund in the past year (3/31/09 through 3/31/10). If you cannot disclose the investor’s name, please state as Public Fund A

or Corporate Plan B, etc…

Name of Investor New/Existing Amount Quarter/Year

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5. Provide a list of investors that have exited the fund in the past year (3/31/09 through 3/31/10). If you cannot disclose the investor’s name, please state as Public Fund A or Corporate Plan B, etc…Do not include investors that receive quarterly income withdrawals.

Name of Investor Amount Reason for Redemption Quarter/Year

2.3. PROPOSED COMMINGLED FUND (S)

For the responding commingled fund please complete all parts this section. If you are proposing more than one commingled fund, please complete an entire section 2.3 for each proposed fund.

1. Manager:

2. Fund Name:

3. Investment Strategy of Fund: please write a short paragraph explaining the strategy of the Fund.

4. Minimum Investment (If applicable): $_________

5. Investment Vehicle:

REIT(Private) REIT (Public)

Limited Partnership Group Trust Insurance Company Separate Account Other (Please Specify)

_6. Fund Statistics (not required for closed-end funds which are in the fundraising process and

that have not made any investments to date) :

($Millions)Commitment Size of Fund $   Entitiy Level Investments $Gross Market Value $   Joint Ventures $

Gross Market Value less JV Partners Interest $   Portfolio Debt/Rate $ / %Net Market Value $   Property Debt $

Net Market Value less JV Partners Interest $   Inception Date  Cash & Short-term Investments $   Number of Participants  Uninvested Commitments $   Number of Investments  Return Target - Nominal %   Avg. Annual Asset Turnover Ratio  Return Target - Real %   % Ownership of Five Largest Participants  Income Return Target %  

Since Inception Return Gross %

Net %

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7. For each section below, please indicate what percentage of the given categories are representative of the gross market value (excluding JV partners interest) for this fund’s assets. Each section should total 100% and dollars are in millions. Also, please note the average physical age of the property type category and how many years on average the properties have been in the fund.

Section A: PROPERTY TYPE

Suburban OfficeAge of Prop.

Yrs. In Fund Retail

Age of Prop.

Yrs. In Fund

High Rise % $ Super-Regional Mall % $Mid Rise % $ Regional Mall % $Low Rise % $ Community Shopping Center % $

Neighborhood Shopping Center

% $

CBD Office Convenience Center % $High Rise % $ Strip Commercial

Development% $

Mid Rise % $ Outlet/Off-Price Center % $Low Rise % $ Retail Total % $Office Total % $

IndustrialApartments Multi-Tenant Business Park % $Garden % $ Warehouse/Distribution % $High Rise % $ Research & Development % $Apartments Total % $ Industrial Total % $

Land HospitalityUnimproved % $ Hotel % $Timber % $ Motel % $Agriculture % $ Resort % $Land Total % $ Hospitality Total % $

Other Total % $

Section B: GEOGRAPHIC REGION

East WestNortheast % $ Pacific % $Mideast % $ Mountain % $

Midwest SouthEast N. Central % $ Southeast % $West N. Central % $ Southwest % $

OtherCanada % $Non-U.S. % $

Section C: GROSS ASSET VALUE (in millions) OF THE INVESTMENTS IN THE FUND (i.e. if the fund has a 50% interest in a $150 million asset that investment should be included in the $100 - $150 million category. Similarly, if the fund has a $100 million investment in five different assets, each asset should be assigned a value, if they can be individually marketed.)

<$1 % $ $20-$50 % $$1-$5 % $ $50-$100 % $$5-$10 % $ $100-150 % $$10-$20 % $ >$150 % $

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Section D: INVESTMENT LIFE CYCLES STAGES

Pre-Development % $ Fully/Substantially Leased (>80%) % $Development % $ Rehabilitation % $Leasing % $ Forward Commitments % $

Other (Explain) % $

Section E: INVESTMENT FINANCIAL STRUCTURES

Unleveraged Equity Ownership % $Leveraged Equity Ownership % $Equity/Mortgage Combination % $Hybrid Debt % $Purchase Options % $Convertible Debt % $Conventional Mortgage % $Mezzanine Debt % $Other (Explain) % $

Section F: PROPERTY LIST

Please include a list of all properties in the fund as of 3/31/10 and include: name of property, location (city, state), property type, acquisition price, acquisition year, equity ownership percentage, leverage amount (if any), debt rate, occupancy %, square footage or units (if multi-family), current market value, implied cap rate, last year NOI, year over year NOI growth, date of last external appraisal, date of next external appraisal, year built/renovated (renovations greater than 10% of value), and whether property management is internal or external to the firm.

8. List all key investment personnel who are involved in the fund’s investment decision-making process. Highlight the person(s) who are responsible for the fund. In one table include their name; title; product responsibility; location; years of real estate investment experience, years of this particular real estate strategy experience; total years with firm; and total investment experience overall.

Name Title 1 2 3 4 5 6

Key:

1 = Product Responsibility (Number of Funds Managed: C = Open-End Commingled, S = Separately Managed Accounts)2 = Location3 = Years of real estate investment experience4 = Years of core real estate strategy experience5 = Total years with firm, includes years with predecessor organization6 = Total investment experience overall

9. Describe your firm’s back-up procedures in the event the key investment professional assigned to this account should leave the firm or be transferred to other accounts or duties.

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10. Specifically address the following as they relate to your firm’s commingled fund:

a. Strategy : Describe the Fund’s strategy in detail. If the strategy is expected to change over the investment period, please describe.

b. Research Process : Describe how research is integrated into the process.

c Key Decision Makers: Detail at each stage of your decision making/portfolio construction process who the key professionals are. Does the Fund had a key person(s) provision?

c.Acquisitions Process : Describe how acquisitions are allocated to this fund. Please state your rotation policy with competing strategies/capital. Also detail the current level (dollar amount, activity, etc…) of competing capital for this fund (other core funds, core separate accounts, etc…).

d.Cash Management : Describe the fund’s process of cash management and redemption policies. In regards to redemption policies, are in-kind distributions ever permitted? Do you allow investors to invest properties in lieu of capital in order to enter the fund?

e.Capacity : What is the fund’s current capacity and timeline to invest new capital? Describe in detail the queue process if one exists to get invested in the fund.

f.Dividend Policy : Describe in detail the process an investor must go through in order to receive dividends on a quarterly basis and whether or not income dividends have preference over other redemption requests.

g.Marking Debt to Market : Describe in detail your firm’s current policy on marking debt to market. Include specifics on your firm’s current procedures for marking debt to market and a table showing the start date of the first quarter you began marking debt to market and what impact this has had on your performance for each quarter. Do you mark your portfolio debt and property debt to market?

h.Mortgages/Loans : Describe in detail any mortgages or loans as primary investments that will be implemented in the fund.

i.UBIT : Discuss any UBIT issues that may arise over the Fund life and how you plan to address them. What has been your experience with UBIT in the past?

j.Current and Prior Fund Details : Please provide the following details as it relates to the current and prior Funds. : Typical hold of investments, Timing of first close, subsequent close and final close, any hard or soft commitments on the fund, % of capital called in prior funds, MV of remaining assets in each prior fund

k. Limitations : List each limitation of the fund for each of the following items and explain each one: cash limit, leverage limit (portfolio and property caps), geographic limits, property type limits, joint venture limits, and non-core asset limits. Are there other limits to the fund that are in addition to the ones listed above? If so, please state them here.

l. Risk Management : How does your firm define, monitor and control risk?

m. Appraisal Process : Describe the appraisal policy and process for this fund.

n. Sell Discipline : What is your firm’s hold/sell policy?

o. Economic Diversification : How does your firm view economic diversification as it relates to this fund? Please attach any supporting analysis as it relates to the diversification of this fund.

p. Advisory Board : Does the fund have an Advisory Board? If so, describe in detail who sits on the Advisory Board, what the role of the Advisory Board is and what specific duties it holds, including any voting rights. Please include Bios of the members of the Advisory Board.

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11. Describe your firm’s capabilities and process for providing asset and property management services for acquired assets. Does your firm use internal or third-party property managers for such assets? If internal, is there an arms length bid process?

2.4. PERFORMANCE

Please provide historical rate of return information as of 3/31/10 by quarter and for year-end for each commingled fund detailed in Section 2.3.

Year QuarterGrossIncome

NetIncome

Gross Appreciation

Net Appreciation

GrossTotal Return

NetTotal Return

PercentLeverage

Gross (w/debt) Market Value

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EXHIBIT BSTATEMENT OF FEES

Please provide a fee structure for the proposed fund(s). Are there any “favorite nations” clauses in the fund’s documents? Include an example fee for a $50, $65 and $75 million allocation.

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EXHIBIT CMINIMUM QUALIFICATIONS

1. My Company is duly registered with the Securities & Exchange Commission pursuant to the Investment Advisors Act of 1940, as amended, and the registration is current.

Yes No

2. My Company shall qualify with the Secretary of State to conduct business in the State of Alabama if selected.

Yes No

3. The portfolio manager assigned to the Alabama Trust Fund account has managed real estate portfolios for at least three (3) years, as of March 31, 2010.

Yes No

4. My Company has managed real estate portfolios for at least three (3) years, as of 3/31/10.Yes No

5. My Company does manage at least $1,000,000,000 in real estate as of March 31, 2010. Yes No

6. My Company and its personnel have all authorizations, permits, licenses, and certifications as may be required under federal, state or local law to perform the services specified in this RFP at the time it submits a response to the RFP.

Yes No

7. My Company will carry errors and omissions insurance or comparable instrument to cover negligent acts or omissions.

Yes No

8. My Company does comply with all applicable GIPS performance presentation standards.Yes No

9. My Company maintains sufficient procedures and capabilities to ensure the timely and accurate backup and full recovery for all computers and other data storage systems related to the Alabama Trust Fund account.

Yes No

10. My Company has a company policy and practice of equal employment opportunity and non-discrimination based on race, creed or gender.

Yes No

11. My Company attests that all workers providing the services described in this RFP are either citizens of the United States or are in proper and legal immigration status that authorizes them to be employed for pay within the United States.

Yes No

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